COVER
"You have to understand the consumer
before you even try to make contact."
The growing number of entities regulating
the credit and collection industry are all
checking to make sure each agency is
following the many laws governing how and
when consumers can be contacted about
delinquent debts.
In addition to adhering to strict
compliance expectations, collection agencies
also need to know as much as they can about
each consumer's financial situation to ensure
their collection approach is tailored to the
consumer's unique circumstances.
"Collection calls typically don't go very
well when assumptions are made on behalf
of the collector," Britt said. "If I'm calling
a consumer who just had a loved one pass
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away and I'm asking for payment in full
of a large bill-well, those are emotional
situations. A lot of those types of calls lead to
complaints, either to the company trying to
collect the debt or to a regulator. So knowing
your consumer's situation before you make
your collection call can help drive the
conversation in the best direction."
DOCUMENTING YOUR POLICIES
AND SCRUBBING YOUR ACCOUNTS
The first step to accepting new claims
from a client is one of the most important:
creating written policies and procedures on
almost every single thing your agency does,
including how you review new claims on
issues such as bankruptcy, military, timebarred debts and calculation of amount due.
"Doing so creates not only risk avoidance,
but it also gives you the one thing you can
possibly have in your toolbox to use if you
are sued-it could create a bona fide error
defense for you," said David Warshaw, a
partner at Pressler & Pressler, LLP.
The bona fide error defense, which helps
collectors avoid liability for Fair Debt
Collection Practices Act violations that
arose out of inadvertent clerical or factual
errors, has never been more important than
it is today. After three years of declines, the
number of FDCPA lawsuits has suddenly
skyrocketed-rising 14 percent from 2014 to
2015, according to WebRecon.
However, to use the bona fide error
defense, agencies must show they had
procedures in place to avoid the error. That
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